Vertex Resource Group Ltd. Reports Fourth Quarter and Year End 2024 Results

Canada NewsWire

SHERWOOD PARK, AB, March 24, 2025

Achieved annual results of $232.2 million of gross revenue and $35.9 million of adjusted EBITDA(1) .

SHERWOOD PARK, AB, March 24, 2025 /CNW/ - (TSXV: VTX) - Vertex Resource Group Ltd. ("Vertex" or the "Company") reports its financial and operational results for the fourth quarter and year ended December 31, 2024. The following should be read in conjunction with the Management Discussion and Analysis ("MD&A") and the audited consolidated financial statements of Vertex for the year ended December 31, 2024, which are available on SEDAR+ at www.sedarplus.ca.

Vertex completed the fourth quarter consistent with expectations and prior year. Revenue declines compared to prior year are attributable to the completion of pipeline projects, including the TMX pipeline which was heavily subcontracted. Our ability to scale to customer demands without impacting margins has been a key factor in maintaining stability.

Key financial results for the three months and years ended December 31, 2024, and 2023 are as follows:

 
 
HIGHLIGHTS 
                                        Three Months ended    Years ended 
                                        December 31,          December 31, 
(in thousands of Canadian Dollars)           2024       2023     2024     2023 
Gross revenue                              52,888     65,110  232,183  255,237 
Less flow through subcontractor costs         408      3,767    2,216    7,978 
Net revenue                                52,480     61,343  229,967  247,259 
Profit margin                              12,860     12,356   60,293   61,684 
 Profit margin %                             25 %       20 %     26 %     25 % 
Adjusted EBITDA (1)                         7,018      7,772   35,889   37,932 
 Adjusted EBITDA %                           13 %       13 %     16 %     15 % 
Free cash flow (1)                         12,070      4,042   21,185   17,810 
Adjusted EBITDA per share, basic and 
 diluted (1)                                 0.06       0.07     0.32     0.33 
Earnings per share, basic and diluted      (0.06)     (0.01)   (0.05)     0.02 
(1) See "Non-IFRS Financial Measures" 
 

HIGHLIGHTS FOR THE THREE MONTHS ENDED DECEMBER 31, 2024

   -- Profit margin increased 5.7% compared to Q4 2024. 
 
   -- Free cash flow1 generated was $12.1 million compared to $4.0 million in 
      Q4 2023. 
 
   -- Reduced loans and borrowings during the quarter by $13.5 million. 

HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2024

   -- Profit margin as a % of net revenue increased to 26.5% compared to 24.9% 
      in 2023 
 
   -- Reduced loans and borrowings during the year by $5.7 million, and lease 
      liabilities by $11.0 million. 
 
   -- Free cash flow1 generated was $21.2 million compared to $17.8 million in 
      2023. 
 
   -- Repurchased common shares using the Normal Course Issuer Bid for 
      consideration of $1.0 million.  The total common shares repurchased and 
      cancelled during the NCIB represent 3.2% of the total issued and 
      outstanding common shares of the Company. 
 
   -- Extended the maturity date of the Syndicate Credit Facilities. 

OUTLOOK

2024 was a transitional year for Vertex. While revenues declined, margins increased due to our steadfast dedication to driving operational efficiencies. We expect our revenue for 2025 to be slightly less than in 2024, with margins remaining similar. There are no major turnaround projects scheduled for 2025, which have historically been executed in the second and third quarters. Our efforts will be concentrated on sustaining steady activity levels and capitalizing on ongoing maintenance and development opportunities across our operating segments.

Vertex will continue to prioritize providing a return on assets for our shareholders. This includes maximizing the effectiveness of our assets and ensuring that our investments generate strong returns. We are targeting a debt covenant ratio of 2.0x by the end of 2026. This goal aligns with our commitment to maintaining a healthy balance sheet by further reducing our debt levels, enhancing our capabilities for shareholder returns or future acquisitions.

The projected GDP growth of 1.8% for Canada in 2025, supported by increased household spending, business investment, and export growth, aligns with the Bank of Canada's outlook. Inflations is expected to remain close to the Bank of Canada's 2% target. However, the uncertainty around tariffs between the US and Canada is expected to impact businesses and consumers. Vertex is diligently monitoring the unfolding situation to ensure we remain nimble and can maneuver through any potential impacts effectively.

Overall, Vertex is well-positioned to navigate the challenges and opportunities of 2025 and beyond. Our unwavering focus on operational efficiencies, strategic asset management, and proactive response to market dynamics ensures that we remain resilient in the face of uncertainty. By continuously enhancing our service offerings and leveraging our expertise, we are committed to delivering exceptional value to our shareholders and driving sustainable growth. Vertex's strategic vision and adaptability will enable us to capitalize on emerging opportunities and maintain our leadership in the industry.

ABOUT VERTEX

Since 1962, Vertex has been a leading North American provider of environmental services. Headquartered in Sherwood Park, Alberta, Vertex employs a staff of approximately 1,000 employees and lease operators that provide services to help clients achieve their developmental and operational goals. From initial site selection, consultation and regulatory approval, through construction, operation and maintenance, to conclusion and environmental cleanup, Vertex provides a wide array of services to customers operating in industries such as energy, mining, utilities, private development, public infrastructure, construction, telecommunications, forestry, agriculture and government.

Vertex principally operates in Canada with select locations in the United States.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

NON-IFRS FINANCIAL MEASURES

This release includes certain terms or performance measures that are not defined under International Financial Reporting Standards ("IFRS"), including "Adjusted EBITDA". The data presented is intended to provide additional information that should not be considered in isolation or as a substitute measure of performance prepared in accordance with IFRS. The non-IFRS measures should be read in conjunction with the Company's financial statements and accompanying notes.

 
A)  "Adjusted EBITDA" is a non-IFRS financial measure 
     which is calculated by adjusting net income (loss) 
     for the sum of income taxes, finance costs including 
     interest accretion on lease liabilities, depreciation 
     of property and equipment and right of use assets, 
     amortization of intangible assets, share-based compensation, 
     restructuring costs and impairment. The Company uses 
     Adjusted EBITDA as an indicator of its principal business 
     activities operational performance prior to consideration 
     of how its activities are financed and the impact 
     of taxation, non-cash depreciation and amortization, 
     restructuring costs and other non-cash expenses such 
     as impairments required under IFRS. Adjusted EBITDA 
     does not have a standardized meaning prescribed by 
     IFRS and is not necessarily comparable to similar 
     measures provided by other companies. Adjusted EBITDA 
     is used by many analysts as an important analytical 
     tool and the management of Vertex believes it is useful 
     for providing readers with additional clarity on Vertex's 
     operational performance. This measure is also considered 
     important by the Company's lenders in determining 
     compliance by the Company with the financial covenants 
     under its lending arrangements. 
 
B)  "Free cash flow" is a non-IFRS financial measure. 
     The most directly comparable GAAP measure for free 
     cash flow is cash flow from operating activities. 
     A summary of the reconciliation of cash flow from 
     operating activities to free cash flow is set forth 
     in the table below. Management uses the term "free 
     cash flow" for its own performance measure and to 
     provide shareholders and potential investors with 
     a measurement of the Company's efficiency and its 
     ability to generate the cash necessary to fund its 
     future growth expenditures, to repay debt and provide 
     shareholder returns. 
 
C)  "Adjusted Working Capital" is a non-IFRS financial 
     measure which is calculated by reducing current liablities 
     by the current portion of loans and borrowings, lease 
     liablities and other liabilities. Adjusted working 
     capital is used by Vertex to monitor its capital structure, 
     liquidity, and it's ability to fund current operations. 
D)  "Adjusted EBITDA per share, basic and diluted" is 
     a non-financial measure which is calculated by dividing 
     adjusted EBITDA by the weighted average shares outstanding 
     -- basic and diluted. 
 

Reconciliations of adjusted EBITDA, free cash flow and adjusted working capital are provided in the following tables.

 
 
ADJUSTED EBITDA                Three months ended    Years ended 
                               December 31,          December 31, 
                                    2024       2023     2024    2023 
Net (loss) income for the 
 period                          (6,839)    (1,324)  (6,134)   2,458 
Add: 
 Depreciation and 
  amortization                     3,863      6,461   23,153  23,619 
 Finance costs                     3,016      2,728   11,498  11,486 
 Impairment                        6,000          -    6,000       - 
 Share-based compensation             68         14      246     164 
 Income tax (recovery) 
  expense                            910      (107)    1,126     205 
Adjusted EBITDA                    7,018      7,772   35,889  37,932 
 
 
 
 
FREE CASH FLOW              Three months ended    Years ended 
                            December 31,          December 31, 
                                 2024       2023      2024      2023 
Cash flows from 
 operating activities          14,561      6,178    44,342    44,950 
Changes in non-cash 
 operating working capital 
 items                        (7,351)      2,409   (8,377)   (6,874) 
Maintenance capex             (3,143)    (3,436)  (15,533)  (15,168) 
Cash interest                 (2,348)    (1,733)   (8,705)   (8,003) 
Depreciation of right of 
 use assets - real 
 property                     (1,200)    (1,332)   (4,160)   (4,860) 
Cash taxes                         63       (69)        63        26 
Proceeds from disposal of 
 property and equipment        11,488      2,025    13,555     7,739 
Free cash flow                 12,070      4,042    21,185    17,810 
 
 
 
 
 
ADJUSTED WORKING CAPITAL                          December 31, 
                                                      2024      2023 
Current assets                                      64,767    70,408 
 
Current liabilities, less                           61,417    69,170 
 Current portion of loans and borrowings          (12,096)  (14,701) 
 Current portion of lease liabilities              (8,778)  (10,722) 
 Current portion of other liabilities              (1,000)   (1,532) 
Current liabilities (excluding current portion 
 of 
 loans 
 and borrowings, lease liabilities, and other 
 liabilities)                                       39,543    42,215 
Adjusted working capital                            25,224    28,193 
 
 
 

Forward-Looking Information

This Press Release contains forward-looking statements and information ("forward-looking statements") within the meaning of applicable Canadian securities laws. The forward-looking statements contained in this Press Release are based on the expectations, estimates and projections of management of Vertex as of the date of this Press Release unless otherwise stated. The use of any of the words "believe", "expect", "anticipate", "contemplate", "target", "plan", "outlook", "potential", "estimated", "intends", "continue", "may", "will", "should" and similar expressions are intended to identify forward-looking statements. More particularly and without limitation, this Press Release contains forward-looking statements concerning anticipated financial performance; the outlook for 2025; the Company's ability to grow profitably; sufficiency of working capital; and with respect to Vertex's ability to meet evolving customer demands.

Since forward-looking statements address future events and conditions, by their very nature they involve inherent risks and uncertainties. Investors are cautioned that forward-looking statements are based on the opinions, assumptions and estimates of management considered reasonable at the date the statements are made, and actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, but are not limited to the risks associated with the industries in which Vertex operates in general, such as:

   -- Ability to access sufficient capital from internal and external sources 
 
   -- Ability to market to new customers 
 
   -- Ability to obtain equipment in a timely and cost-efficient manner 
 
   -- Ability to secure work 
 
   -- Adjustments and cancellations of backlog 
 
   -- Changes in legislation, including but not limited to tax laws and 
      environmental regulations 
 
   -- Collection of recognized revenue 
 
   -- Commodity price, interest rate and exchange rate fluctuations 
 
   -- Competition, ethics, and reputational risks 
 
   -- Compliance with environmental laws risks 
 
   -- Cyber-security risks 
 
   -- Economy and cyclicality 
 
   -- Geopolitical risks 
 
   -- Global pandemics 
 
   -- Health, safety and environmental risks 
 
   -- Industry and inherent project delivery risks 
 
   -- Insurance risk 
 
   -- Joint venture risk 
 
   -- Labour matters 
 
   -- Litigation risk 
 
   -- Loss of key management; ability to hire and retain qualified and capable 
      personnel 
 
   -- Maintaining safe worksites 
 
   -- Operational risks 
 
   -- Potential for non-payment and credit risk and ongoing financing 
      availability 
 
   -- Third party credit risk 
 
   -- Unforeseen weather conditions 
 
   -- Unanticipated shutdowns, work stoppages, and lockouts 
 
   -- Volatility of market trading 

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of the parties, and the combined company are included in reports on file with applicable securities regulatory authorities, including but not limited to: Annual Information Form for the year ended December 31, 2024, which may be accessed on Vertex's SEDAR+ profile at www.sedarplus.ca.

The forward-looking statements contained in this Press Release are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as, and to the extent required by applicable securities laws.

SOURCE Vertex Resource Group Ltd.

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March 24, 2025 03:30 ET (07:30 GMT)